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Markets regulator SEBI has extended the deadline for angel funds to comply with the new accredited investor mandate by nearly seven months until March 31, 2027 after receiving representation from the AIF industry. The relaxation applies to angel funds registered with SEBI on or before September 10, 2025. These funds were earlier required to comply with the mandate by September 8, 2026. Until the revised deadline, such funds will be allowed to offer investment opportunities to a maximum of 200 non-accredited investors, SEBI said in a circular released yesterday. For context, an accredited investor is an investor who meets SEBI-prescribed financial eligibility criteria and has been formally accredited. The eligibility criteria for individual investors includes annual income of over ₹2 Cr and a net worth of over ₹7.5 Cr with at least ₹3.75 Cr in financial assets. Trusts and corporate bodies need to have a net worth equal or greater than ₹50 Cr to be eligible. After the deadline, angel funds will not be permitted to accept contributions from non-accredited investors for investments in portfolio companies. However, investments already made by non-accredited investors will not be affected. Such investors can continue to hold their existing investments in the angel fund in accordance with the fund’s private placement memorandum and other governing documents. What Changed In 2025? SEBI amended its AIF regulations in September 2025 to introduce a revised regulatory framework for angel funds, which are a subcategory of venture capital funds under Category I AIF. Here are some of the salient guidelines set for these funds: Angel funds must onboard at least five accredited investors and declare their first close within 12 months. These funds can invest directly in startups without launching separate schemes. The requirement to file term sheets with SEBI has been discontinued, though records must be maintained. Follow-on investments are now allowed in existing portfolio companies, subject to the fund maintaining its pre-investment ownership percentage and a ₹25 Cr overall investment cap per company. Investment allocation among participating investors must follow a pre-disclosed, non-discretionary methodology. Existing angel funds will now be classified as Category I AIF – Angel Funds, rather than a sub-category of venture capital funds. Under the new framework, angel funds registered after September 10, 2025, can onboard and offer investment opportunities only to accredited investors. The latest relaxation does not apply to these newly registered funds. Meanwhile, funds registered on or before that date were provided a transition period to comply with the requirement. SEBI has now extended that transition window while leaving the remaining provisions of its angel fund framework unchanged. The amendment is intended to identify investors considered financially capable of evaluating and bearing the risks associated with complex investment products. Early-Stage Funding Impact Angel funds pool capital from individual investors to back startups in their early stages, when access to institutional venture capital is often limited. Unlike venture capital funds, several angel funds allow investors to decide whether they want to participate in individual deals. SEBI has previously sought to tighten oversight of such structures and address concerns around the blind pooling of capital. The latest move is, however, only a deferral and does not dilute the accredited investor requirement. After March 31, 2027, legacy angel funds will also have to restrict fresh deal-wise contributions to accredited investors. The extension comes as angel networks continue to be active participants in India’s early-stage startup ecosystem. For instance, We Founder Circle emerged as one of the most active Indian startup investors in the first half of 2026, participating in 36 funding deals during the period including 1buy.ai, Sarva Foam, Ctruh, Thermoflyde and Foodsquare. Similarly, IAN Group (erstwhile India Angel Network) was part of 17 startup investment deals in H1 2026. Some of its notable investments include Astranova Mobility, Spector.ai, wellness brand Hyugalife, gifting platform Zuvees and electrical components manufacturer TIEA Connectors. In terms of fund launches, Hyderabad Angel Fund (HAF) launched a ₹100 Cr early-stage fund in 2025 to invest ₹2-4 Cr each in 15-20 startups across sectors including AI, spacetech, healthtech, fintech and SaaS.
document fetched 2026-09-09 11:01 · canonical https://inc42.com/buzz/sebi-extends-accredited-investor-compliance-timeline-for-angel-funds-till-march